In an ever-changing regulatory landscape for companies in financial services, the need to stay up to date and compliant is vital.
According to Christina Barbash – business development manager at Point Nine – the company has been empowering FinTechs with the RegTech tools required to drive efficiency and navigate the changing landscape for a number of years.
For foreign exchange brokers, Barbash claims the company is well equipped to understand the critical challenges retail Forex brokers face when it comes to monitoring, preparing and submitting the required regulatory reports.
Point Nine highlighted that one of its main priorities is to help such firms address the increasingly dense reporting challenges.
The first challenge includes understanding reporting requirements. Regulated firms are always subject to at least one regulatory regime and reporting requirements can often be difficult or even impossible to understand.
Another key issue facing retail FX brokers is how to consolidate data. Currently, retail FX brokers use various systems including trading platforms and CRM bridges to meet their clients’ needs. Often, gathering all the required data for reporting in one place can be challenging. Alongside this, data quality is also a challenge – with the way most FX brokers currently store their data can create inconsistencies, gaps, inaccuracies and duplications.
There are also challenges around managing reporting errors. When FX brokers submit their regulatory reports, the systems of competent authorities generate feedback that identify reporting errors. However, knowing how to resolve those errors is an ongoing battle for brokers, Barbash claims.
Under the EMIR Regulation – which aims to increase the transparency of the over the counter derivatives market – matching unique transaction identifiers with their legal counterparties is the most difficult obligation under the regulation.
A key and constantly evolving challenge for retail FX brokers is regulatory updates and amendments. Reporting requirements and specifications are subject to constant changes that can come from a range of different sources, including the European Securities and Markets Authority, trade repositories, national competent authorities and approved reporting mechanisms.
Point Nine detailed that instrument eligibility under MiFIR is another key reporting challenge. This is due to the fact that what is considered a financial instrument under the scope of the MiFir framework may suddenly change, therefore keeping tabs on these constant changes can be tough for brokers.
The company also referenced file format as a challenge, as competent authorities use different systems that require reporting data to be submitted in different file formats – with Point Nine using the example of an XML file as a complex format to construct for most brokers.
The final reporting challenge is that of audit trading, as brokers regularly need to keep a record of what has been submitted and accepted by the competent authorities.
Point Nine said, “We have identified and developed a thorough understanding over these issues, which allows us to develop tools that simplify their complexity and ultimately eliminate them altogether.
“Our goal has always been to become a trusted partner to financial technology firms, taking over their compliance and reporting challenges, whether that is keeping up-to-date with the latest regulatory requirements, simplifying procedures for submitting reports, or providing them with the tools to improve their services, which in turn allows them to concentrate on their core offering.”
Copyright © 2021 RegTech Analyst
Copyright © 2018 RegTech Analyst
